Dec. 9 (Bloomberg) -- Pioneer Investments is recommending
that investors prune their holdings of U.S. equities, saying
that the improving economy has reduced the scope for Federal
Reserve stimulus to propel further gains in stocks.

“Markets have anticipated the improvement in the economy,
so going forward it will be more important to look at the
improvement in the economy and less at the moves of central
banks,” Pioneer’s Group Chief Investment Officer Giordano
Lombardo, who oversees about $228 billion of investments
globally, said in Paris last week. “The point is: the marginal
effectiveness of unconventional monetary policy is shrinking.”

Lombardo said his company continues to hold more equities
than are represented in asset-allocation models because monetary
stimulus remains so great. He recommends having an underweight
position in U.S. equities and an overweight position in
European, Japanese and Chinese shares.

The minutes of the last Fed meeting released on Nov. 20
showed that officials will consider reducing the central bank’s
$85 billion in monthly bond purchases if the economy improves in
line with their forecasts. The extraordinary monetary stimulus
has helped the Standard & Poor’s 500 Index more than double,
bringing a measure of U.S. equity volatility to its lowest level
since February 2007 earlier this year. The Euro Stoxx 50 Index
has rallied 65 percent and China’s CSI 300 Index has jumped 11
percent in the same period.

“We need to recognize we are entering a more dangerous
stage of the the equity market,” Lombardo said. “That is why
we are more and more cautious about the U.S.”